It costs you money to borrow money

When comparing loan options it’s important to be aware of your loan interest rate, all the fees associated with borrowing the loan, and the repayment responsibilities. Below are some frequently asked questions regarding this process.

What costs should I be aware of when I’m comparing loans?

Lenders charge borrowers an interest rate to borrow money. Other fees such as origination fees and repayment fees may also be assessed depending on your lender and loan type. The money the lender makes from the interest and additional fees is considered a profit to them. It’s important to be aware of your loan interest rate, all the fees associated with borrowing a loan, and the repayment responsibilities so that you can understand the true cost of borrowing the money you are requesting. See the chart below to compare the cost differences between federal and private loans.

How much interest will accrue on my loan every month?

The interest rate assessed by your lender to your loan is charged on top of the principal amount of money you borrow. Try this simple calculation to determine how much you may spend on interest each month:
Interest Rate X Loan Balance / 12 months = *Approximate monthly interest accrued

*This is an approximate figure because it doesn’t consider the actual number of days since your last payment and it doesn’t use an accurate Interest Rate Factor.